Taylor Wessing LLP

As the Muslim population grows worldwide so does the demand for Sharia-compliant finance. Even in areas in which Muslims do not yet make up the majority, there is a strong demand for this type of niche financing, particularly for real-estate investment; understanding the main structures of Islamic finance that are integral to real-estate transactions are guaranteed to grow in relevance.

In facility agreements, maintaining a zero floor for the IBOR gives lenders assurance that their transactions will at least not be punishing. But how do lenders and borrowers respond when interest rate swaps enter the arena, leading to the possibility of mismatches in rates payable, especially when negative interest rates are a factor?